New Law Means Delinquent Taxpayers Must Pay Up or Face Losing State Licenses

On October 4, 2011, Governor Jerry Brown signed Assembly Bill 1424, The Delinquent Taxpayer Accountability Act, requiring the California Department of Motor Vehicles Department to suspend the driver's licenses of its worst delinquents.

"If you don't pay your California taxes, you can't drive-we mean it," says Assembly member Henry Perea, who sponsored the bill. The suspensions will apply to those in what some call the Hall of Shame-the state's list of top tax debtors.
With the nation's economy still reeling, California isn't alone in its quest for unpaid taxes. All states have the traditional recourse of liens and wage garnishment. But these actions are labor-intensive. As states become more aggressive about collecting taxes, taxpayers need to realize that ignoring a debt could mean public exposure or loss of a privilege.

The California driver's license suspensions will affect the state's top 1,000 tax debtors, whose names will be published online in two lists of 500 each. One list will be drawn from the income-tax rolls, with those on the second drawn from sales and other tax rolls. The new law expands an existing program by doubling the number of names, which includes many well-known public figures and celebrities, on the published lists and adding the license suspensions.

California's new program applies to more than driver's licenses. It also affects those for physicians, nurses, opticians and beauticians, among others. In addition, the Alcoholic Beverage Control board and California State Bar Association will receive the tax-debtor lists and are allowed to suspend liquor and legal licenses, but they aren't required to.

What about due process? All the taxpayers listed have had liens filed against them, and they'll have at least 90 days after formal notice is issued before licenses are suspended, according to state officials. The first lists used for license suspension will be published next July, with the first suspensions beginning in October.

Tax-debtors will have their license reinstated after making payment arrangements with the state or if they demonstrate financial hardship. Mr. Perea and state tax officials are hoping the program will encourage big debtors to pay their taxes.
If you are currently behind on your state tax obligations, or If you have any questions about how this new law may affect you, call us at (916) 488-8501.

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